Monday Market Briefing - 23rd September 2024

Although the UK does not currently have an export surplus, the biggest threat to grain prices this season is the oversupply of feed wheat – dragging down the base price.  Imports continue to arrive at UK ports (321k MT in July 2024), bringing in milling wheat (that we need) and feed grains & corn (which is cheap, and better value than UK feed wheat).  These imports could lead to a larger balance of UK feed grains which feed compounders are struggling to use.  It could also lead to an eventual surplus of low quality feed wheat.

Post-harvest, the UK flour miller is looking at the available stem of 13% protein milling wheat – both from domestic production, and from imported EU milling wheat.  Due to this season’s growing conditions, much of the applied nitrogen was washed out of soils leading to lower protein levels in their wheat than normal.  Instead, UK growers have produced milling wheat with an average level of 11% protein.  Domestic milling premiums for 13% protein Group 1’s are unlikely to weaken due to a shortage of this type of grade.  Therefore, how does the UK miller receive enough 13% protein wheat for the UK flour demand?

The UK import data includes 55k MT of very high protein Canadian spring wheat – which is unusually large.  The Canadian growing conditions were perfect, and they have ended up with an export surplus of 16% protein milling wheat.  The UK miller is faced with a shortage of suitable milling wheat for their 13% protein grist, so instead is blending 16% Canadian with 11% UK to get to their 13% protein wheat.  This calculation will continue to work as long as the Canadian imports continue to flow to the UK, and the price remains unchanged.  With historically high premiums for the low protein 11% milling wheat, growers should take advantage of this marketing opportunity while the Canadian high pro wheat is still flowing.

Have a good week